Do the numbers stack up?

A property that loses money inside super is still a property that loses money. The tax wrapper does not fix bad maths.

My mate Tony ran a café for six years. Good coffee, loyal customers, always busy. He still went broke.

The problem was not revenue. It was that his rent, wages, insurance and loan repayments added up to more than the coffee brought in, every single month, and he kept telling himself next quarter would fix it.

Your SMSF is a small business too. It has revenue (returns) and fixed costs (fees). If the fixed costs eat the revenue, it does not matter how good the coffee is.

This chapter is about making sure your fund is not Tony’s café.

What an SMSF actually costs

Here are the numbers, current for the 2026 to 27 year. Where a figure is indexed or changes, I have said so. Check the current amounts before you rely on them.

Setup, one off:

• Fund establishment, trust deed and registrations: $1,500 to $3,000 through an accountant or specialist provider
• Corporate trustee setup, strongly recommended: roughly $1,000 to $1,500 including ASIC registration

Every year, forever:

• Accounting, administration and tax return: $2,000 to $4,000 for a fund holding property
• Independent audit, compulsory: $500 to $800
• ATO supervisory levy: $259
• ASIC annual review fee: $70 for a special purpose company, and this one only applies if you have a corporate trustee. One trap for later: if your borrowing structure uses a separate bare trustee company that is not registered as special purpose, its annual review fee is the standard proprietary company rate, currently around $342. Worth checking how yours is classified.
• Financial advice, valuations and legal work: variable, from zero in a quiet year to a few thousand when things happen

All up, a property holding SMSF typically runs $3,000 to $8,000 a year. Use $5,000 as your planning number and adjust once you have real quotes.

Your break-even percentage

Divide your annual costs by your balance. That is the return your fund must earn before it has made you a single dollar.

Combined balance	Costs at $5,000 per year	Break-even hurdle
$100,000	$5,000	5.0 per cent
$200,000	$5,000	2.5 per cent
$300,000	$5,000	1.7 per cent
$500,000	$5,000	1.0 per cent
$1,000,000	$5,000	0.5 per cent

Now compare that to the alternative. A decent industry fund charges roughly 0.7 per cent all in. That is the boring benchmark your SMSF has to beat, after its own costs, year in and year out, or the whole exercise is an expensive hobby.

At $100,000, you need to outperform by more than 4 per cent annually just to draw level. At $500,000, the handicap nearly disappears. That is the entire minimum balance argument from chapter 2, in one table.

What property adds to the bill

Owning direct property loads more costs onto the fund. They come in two waves.

At purchase: transfer duty (state based, and on commercial property it is generally assessed on the GST inclusive price, a nasty compounding detail chapter 9 unpacks), legal and conveyancing work, building and pest or technical due diligence, lender and valuation fees if borrowing, and on many commercial purchases a temporary GST amount that has to be funded at settlement even though most of it comes back. Budget 5 to 7 per cent of the purchase price for the lot, and be pleasantly surprised if it is less.

Every year: insurance, maintenance, council rates, water, land tax depending on the state and the fund’s holdings, property management, and accounting complexity. Here is where residential and commercial part ways, and the difference runs in commercial’s favour. Under a typical commercial net lease, the tenant reimburses most outgoings: rates, insurance, often land tax too, with one notable exception being retail premises in Victoria, where land tax cannot be recovered from the tenant. A residential landlord wears all of it. Chapter 6 makes this concrete.

The catch, and it is a big one: when a commercial property is vacant, all those outgoings snap back to the owner at the exact moment the rent stops. Vacancy in commercial is a double hit. Remember that for the stress test.

The yield conversation

Time to put revenue on the table. Here is the same $700,000 deployed two ways, using typical figures as I write. Your deal will differ; the shape will not.

Residential house, $700,000. Gross yields on Australian houses mostly sit between 3 and 4.5 per cent. Call it 4 per cent: $28,000 a year in rent. Now subtract management at 7 per cent, insurance, rates, water, maintenance, and a couple of weeks’ vacancy: you land somewhere around $19,000 to $21,000 net. Roughly 2.8 to 3 per cent on your money.

Commercial unit, $700,000. Net yields on solid suburban commercial mostly sit between 5 and 7.5 per cent, and crucially they are quoted net: the tenant pays the outgoings on top. At 6 per cent net, that is $42,000 landing in the fund, with rates and insurance largely reimbursed. Double the income from the same capital.

So why does anyone buy residential? Because the commercial number carries different risks. Residential vacancies are measured in weeks; commercial vacancies in months, sometimes a year or more, with the outgoings reverting to you the whole time. Residential tenants are interchangeable; a commercial property’s value can be welded to the quality of a single tenant and a single lease. Residential debt used to be cheaper and easier; commercial debt still costs more and demands bigger deposits.

Higher income is not free money. It is payment for lumpier risk. The whole of part three exists to teach you how to judge whether a specific commercial deal is being paid enough for the risk it carries. For now, just hold the shape: commercial pays roughly twice the income and asks you to survive longer droughts.

The tax ledger inside super

Now the part that makes the wrapper worth the trouble. Inside your SMSF, in accumulation phase:

• Rent is taxed at 15 per cent. Not your marginal rate. Fifteen.
• Capital gains on assets held longer than 12 months get a one third discount, so the effective rate is 10 per cent.
• Once the fund is paying you a retirement pension, the tax rate on income and gains supporting that pension is zero, within the transfer balance cap covered in chapter 14.

Now put that against the world outside super, as it stands from 1 July 2027. For an established residential investment bought after 12 May 2026 and held in your own name, rental losses are quarantined, and when you sell, the old 50 per cent discount is gone, replaced by cost base indexation plus a minimum 30 per cent tax on the gain.

Run one honest comparison. Say a property delivers a $300,000 real gain over the years you hold it, and you sell in retirement.

• Held personally, sold after 1 July 2027: tax at a minimum of 30 per cent of the gain. Around $90,000 to the ATO, likely more.
• Held in your SMSF, sold in accumulation: effective 10 per cent. About $30,000.
• Held in your SMSF, sold while supporting your pension: zero.

Same property. Same gain. Up to a $90,000 difference, purely from where it lived. Superannuation was deliberately excluded from the 2027 changes, which means parliament looked at this gap and chose to keep it. Take the hint, but take it honestly: super’s price for those rates is that the money is locked away until you meet a condition of release, and the running costs above never stop. The wrapper rewards patience. It punishes people who need the money back early.

One aside for completeness. If your total super balance is heading past $3 million, Division 296 adds extra tax on part of your earnings from 1 July 2026. Most readers are nowhere near it. If you might be, chapter 14 covers it properly, including a one off election with a deadline attached.

The stress test

In chapter 3 you watched Sarah and Marcus stress test their 2024 purchase before signing. Their asset belongs to the old world; their method belongs to every world. Here it is, tuned for what you will actually buy today.

Take your shortlisted deal and break it three ways on paper:

1. Rates up 2 per cent. Recalculate the repayments. Does rent still cover them, with margin?
2. The long vacancy. For residential, three months. For commercial, twelve, and remember the outgoings come back to you while it sits empty. Does the fund’s cash buffer, plus contributions, carry the loan, the rates, the insurance and the fund’s own fees for that long without selling anything?
3. Contributions stop for a year. Job loss, business downturn, parental leave. Does the structure survive on rent and buffer alone?

If the deal survives all three, you have a real candidate. If it only survives on the brochure assumptions, you have found your walk away moment early, which is the cheapest possible time to find it.

The single most useful output of this chapter is one number: the cash buffer your fund will hold and never invest. For a commercial purchase, I want to see 12 months of loan repayments plus outgoings plus fund costs sitting in the offset or at call. Boring money. Sleep money. The money that means a vacant six months is an annoyance instead of a fire sale.

Find your sweet spot, or have the guts to walk away.